Brighton Hippodrome campaigners have lost their battle to see the building restored as a live venue after the government decided not to intervene over plans to convert the space into a cinema complex.

The Department for Communities and Local Government has decided it will not use its powers to call in the local authority-approved plans – which could have seen a public inquiry launched into whether the conversion should go ahead.

A DCLG spokesman said: “This is a matter for Brighton and Hove City Council. Only a very few planning applications are ‘called in’ each year, as this involves the planning decision being taken away from the local council and community.”

The Theatres Trust said it was “deeply disappointed” the public inquiry would not be going ahead.

The national advisory body’s director Mhora Samuel said: “Brighton and the hippodrome have been let down by this decision. Unless the developers reconsider their scheme we will have lost the potential to stage lyric theatre and performance in the hippodrome’s unique theatrical space. It could have been a real asset to Brighton’s cultural scene.”

Campaigners who want to see the venue reopened for live entertainment have said they are angered by the DCLG’s decision.

“We are angry and furious. It will not be reversible – once it [the hippodrome] goes, it goes. We have been up against it all along. If the planning decision had come up now, we would have been in a very different position,” said David Fisher from the Our Brighton Hippodrome campaign group.

Despite the setback, Fisher said the campaign group would be showing its recently completed plans for the venue to the council, which demonstrate how a 1,550-seat flexible £18 million theatre would be a viably financial option for the building.

Plans for the disused 1,400-seat Brighton Hippodrome to become an eight-screen cinema and restaurant complex were put to the local authority in July.

A spokeswoman from the council said it was pleased that the DCLG had decided not to step in over the plans.

“It is a real shame that the building has been closed since 2007 and it is sad to see its decline, but these plans mean we can look forward to a new chapter in the hippodrome’s history and ensure its long-term survival,” the spokeswoman said.

She added: “We sympathise with campaigners who would love to see it turned back into a theatre, but this has been looked at and the district valuer confirmed that a theatre was unlikely to be viable.”

[1] topped the Theatres Trust’s list of UK theatres most at risk of closure, deterioration, neglect, lack of funding or poor managemen: http://beta.thestage.co.uk/news/2014/09/uk-theatres-threat-named-risk-register/

[2] The council’s planning committee agreed to the proposals, but decided to defer the decision to the DCLG: http://beta.thestage.co.uk/news/2014/07/council-approves-brighton-hippodrome-cinema-conversion-plans/